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Pfizer merges with Pharmacia

Pfizer Inc. and Pharmacia Corporation combined operations on April 16, after clearing several legal hurdles.

In 2001, Pfizer had worldwide revenues of more than $32 billion and Pharmacia had sales revenues of more than $13.8 billion, according to Federal Trade Commission documents.

Pfizer purchased Pharmacia in July of 2002 but faced several months of scrutiny from the Federal Trade Commission and the European Commission (JAVMA, March 1, 2003, page 573), as the agencies determined whether the merger violated antitrust laws and would have a detrimental effect on competition. The company reached a settlement with the EC in February 2003 and the FTC in April 2003. The combined corporation will be called Pfizer Inc.

To settle antitrust and anticompetition charges filed by the FTC, the companies will divest pharmaceutical products in nine separate product markets to third-party companies. The products include drugs for canine arthritis, antimicrobials for treating mastitis in lactating and nonlactating cows, and several products to treat human illness.

"This settlement will allow Pfizer and Pharmacia to consummate their merger, while it ensures that U.S. consumers continue to enjoy the benefits of rigorous competition," said Joe Simons, director of the FTC's Bureau of Competition, in a statement.

Despite the demand for arthritis drugs for dogs and antimicrobials for mastitis in cattle there are only a handful of companies producing these products, according to the FTC.

Pfizer produces Rimadyl, the leading arthritis drug for dogs, and held a 70 percent share of the more than $81 million market for those drugs. Two other companies produce similar products. Wyeth, through its Fort Dodge Animal Health division, produces EtoGesic, and Novartis, through a license and supply agreement with Pharmacia, launched Deramaxx in February 2003. If the merger had continued without FTC intervention, the number of companies producing arthritis drugs for dogs might have dropped to two, decreasing competition and potentially raising prices for consumers.

To maintain the same level of competition, the FTC agreement requires Pharmacia to renegotiate its agreements with Novartis to allow that company to become a competitor and produce the drug independently. The agreement ensures that three separate companies will continue to produce arthritis drugs for dogs.

The market for antimicrobials for mastitis in cattle is similarly concentrated, with only three major competitors in the market—Pharmacia, Wyeth, and Pfizer, according to the FTC. To prevent Pfizer and Wyeth from becoming the sole producers of antimicrobials for mastitis in cattle, the FTC is requiring Pfizer to divest all of its U.S. rights to its mastitis antimicrobial products to Schering-Plough Corporation.

Elizabeth Jex, an FTC attorney, explained that Pfizer was required to contact pharmaceutical companies that would be interested buying their mastitis products. Of the companies that were interested in the product, the FTC deemed Schering-Plough the most suitable. Their suitability was judged on the basis of whether they already had a line of cattle health products, an established sales force to sell the products, and the capability to manufacture the mastitis products.

"Of the few companies that had interest in the products, (Schering-Plough) was the best suited—from a manufacturing and sales standpoint," she said.

Officials from Pfizer said the company is satisfied with the settlement.

"We are very pleased by this decision and we look forward to operating as a unified company," said Hank McKinnell, chairman and CEO of Pfizer.